Agenda and minutes

The minutes of the meeting on 21^st January 2009 were confirmed as a correct record.

Mr Cowan referred to the Committee’s previous request for further information on the Chief Officers’ bonuses; Mr Sass agreed to follow this up.

The minutes of the meeting on 26 January 2009 were approved as a correct record.

Mr Truelove referred to the answer given on the “Freedom Pass” and stated that it clarified his comments at the previous meeting; that there are young people who live in Kent who are excluded from the scheme because they do not attend a school within Kent County Council’s administrative area.  It was not intended as a bus to school it was to allow young people the freedom to travel.  Mr Truelove stated that it was a deliberate policy to create a disincentive for young people to choose to go to schools outside of Kent’s administrative area.  It was accepted that it was a very good scheme but it was immoral to apply the scheme to young people in Kent but not to those who attend schools outside of Kent’s administrative area despite the fact that their parents pay council tax to Kent County Council. 

Dr Eddy queried whether there might be human rights issues relating to the scheme on the basis that if you’re within one jurisdiction you should be entitled to all the rights available within that jurisdiction.  It was suggested that the Monitoring Officer be consulted over the legalities of the scheme.

Mr Cowan stated that the Freedom bus pass was not solely about going to school in Kent, it was a 7 day freedom pass for young people who live in Kent. 

Mr King explained that as he understood the Freedom Pass was available to young people who were in Kent, not specifically related to travel to and from school.  He requested that it be clarified by Mr Ferrin. 

Mr Northey expressed his view that it was a brilliant scheme, in his opinion it was a not human rights issue, he asked that the Committee look, with Mr Ferrin’s assistance, how far it may be possible to extend it. 

Mrs Dean agreed that it was a brilliant and wonderful scheme but it was clearly possible to improve in the light of experience.  One of the reasons it was proposed by the Select Committee was for the added advantage to young people for out of school activities and to enjoy the right to visit facilities around Kent during the evenings.  Mrs Dean asked that the Committee request that Mr Ferrin provide a complete and accurate minute relating to the policy, including whether we are funding children that live outside Kent but who attend school within it.  Once the Committee had received the policy Members could then have an informed debate. 

RESOLVED that:

(1)   A letter be sent to Mr Ferrin, Cabinet Member for Environment, Highways and Waste in the names of the Chairman and Spokespersons of the Committee drawing his attention to the following concerns:

a.      The eligibility under the scheme of children who live within the administrative county of Kent but who travel outside of the area to attend school;

b.      The possible adverse impact on the lawful rights of a number of young people to travel freely, together with  ...  view the full minutes text for item 128.

Mr Smyth explained that the Committee had previously requested more detail about “clawback” arrangements, the Budget IMG had followed that up and a report would come back to the Budget IMG at the next meeting. 

RESOLVED that:

The notes of the Budget IMG held on 30 January 2009 be agreed.

(Representative from Price Waterhouse Coopers will attend at 10.30am).

The Chairman explained that a list of questions had been produced in advance of the meeting and submitted to Price Waterhouse Coopers (PWC) and he was grateful to Mr Simmonds for producing the bulk of the questions.

Mr Williams, the representative from PWC explained that the scope of the work undertaken by PWC covered three areas; there was a need to check the compliance of all the outstanding investments – to ensure that there was nothing else at risk, the sequence of events leading to the appointment of Butlers, and any observations on the way the treasury management framework was operated. 

PWC looked at 423 deposits dating back to October 2006, £50 million was trapped in Icelandic deposits, £3 million of which was deposited after advice from Butlers.  PWC noticed that the counterparty lists were generally updated in a timely manner but there were some examples where the lists had not been updated immediately.  Some deposits were made to two building societies, Cheshire and Derbyshire, after advice had been given to remove them from the list and one investment was made where the counterparty limit was breached by £5million for four days.  Mr Williams stated that he had found a general lack of evidence of review, or of documented evidence, however generally there had been improvements in the standards of documentation since 2006.  Mr Williams stated that regarding the appointment of Butlers, the procurement procedures were not fully followed, in his opinion a risk assessment of what was being procured rather than the value of what was being procured would have been more beneficial.   Mr Williams described his experience of some authorities using a zero budget for returns on investments to ensure that security was a priority – he explained that that was something that the Treasury Policy Group (TPG) considered and he recommended that the TPG should meet more regularly and that procedures could be more comprehensively documented.

Mr Simmonds asked about the role that Members should play in the treasury management process; he also added that there was nothing in PWC’s evidence that showed that the desire for return had outweighed the core principles of prudence with regard to the weighting of the authorities invested in.  Mr Simmonds referred back to the PWC report stating that there were indications in March 2008 about the status of the Icelandic banks, he asked about the status and the source of that information.  Mr Simmonds also asked about country exposure and whether, in the opinion of Mr Williams, Butlers or the Treasury Policy Group considered this.

Mr Williams gave three examples of sources of information about the status of the Icelandic banks, The Economist on 17 May 2008, The Daily Telegraph in April 2008 and the Sunday Telegraph in March 2008 in which there was an article ‘Iceland shows cracks’.  In terms of country exposure and whether more than 25% of the portfolio is invested in one country, no evidence was found during that period where that limit had been  ...  view the full minutes text for item 130.

Mr Scholes opened this item by stating that it was obvious that there had been a heavy involvement of lawyers in Butlers’ responses.  Mr Smyth supported Mr Scholes view, the Committee had not been told very much and paraphrasing the responses Butlers were the ‘postman’ in the process which Mr Smyth disagreed with.

Mr Gough stated that what was missing from Butlers’ document was their role in credit risk advice.

Mrs Dean asked whether the Committee would have the opportunity to hear the views of the Finance Department on Butlers’ responses, some of the points made by Butlers needed to be clarified, particularly the claim that emailing staff was the normal method of communication. 

Ms McMullan agreed to provide as many answers as possible at this stage to the Committee.

Mrs Dean queried the process used by Butlers to advise the Council that there had been a change in the credit rating agency, i.e. an email sent to an individual whom Butlers were instructed to communicate with.  Mrs Dean queried whether that was factually correct and whether that was the normal method of communication between Butlers and the County Council.  Ms McMullan confirmed that what she hadn’t been able to find the original document which clarified to whom emails should go to on that basis, the relationship with Butlers went back a number of years; Mr Vickers might be in a better position to answer that point.  The relationship with Butlers seemed to be that information was emailed to the treasury member of staff, but Mr Vickers was on the telephone to Butlers on an almost daily basis.

Mr Simmonds raised the issue of the meeting with Butlers which took place a day before the email was sent, he queried why there was such a change over 24hours, that was a key issue.

Ms McMullan confirmed that there was evidence that the quarterly meetings with Butlers included reviewing where the Council was in terms of its policy and strategy, and also on the agenda every time was those organisations on the counterparty list.  The expectation around the advice was to be told whether there were any issues around those organisations on the counterparty list, there was no debate around any Icelandic banks either at the meeting in late September or in previous meetings.

Mr Hotson asked Mr Chard where the Cabinet was in taking those issues forward, it was clear that systems were going to have to be reviewed in house, clear notes of meetings for example, were essential.  There should be Member involvement in approving, or not approving, the recommendations made by Cabinet on this issue.  Mr Chard responded by saying that he welcomed the engagement of the Council with PWC, most of the recommendations of the PWC report had been implemented and there was an Economic Management Group meeting on Thursday.  The PWC report highlighted outsourcing or skilling up in-house, there was also a third option which was to ensure that internal staff were adequately trained,  ...  view the full minutes text for item 131.

(Members are requested to bring their copy of the draft Budget and Medium Term Plan circulated on 7 January 2009).

The Chairman opened this item by explaining that the budget had been scrutinised on an individual portfolio basis by the Policy Overview Committees (POCs), it was the intention of the Cabinet Scrutiny Committee to look at the budget as it related to the whole Council. 

Mr Smyth began by commenting on the revision to the Council tax increase and the additional money from rescheduling investments.  There were enormous pressures facing the authority and government settlements for the future were assumed to be tight.  Bearing in mind the pressure on the Council Mr Smyth asked why a reduction in Council tax was proposed as a short term measure rather than investing some of the money to relieve future pressures? 

Mr Chard responded by saying that each year for the past 6 or 7 years, those tax payers on a fixed income had found it progressively harder to pay Council Tax.  In the current economic circumstances it was felt that the Council should support those who were finding it more difficult to afford the Council Tax.  It was right for the Council to pass on the savings to Council Tax payers in Kent.  It was a judgement call for the Council to make when the report was debated on the 19 February.  Mr Smyth explained that he was commenting on using the money to ease the strain on budgets in the future.  Mr Chard confirmed that it was right for the Council to allocate sufficient resources to its services; having made this ‘extra money’ for the Council it should be passed on to the Council Tax payers. 

Mr Truelove commented on the regeneration strategy and stated that because of the economic downturn it was a critical agenda, he asked Mr Chard what he saw as the critical challenges for the budget in delivery of the strategy.  Mr Chard responded by commenting on the increase in the budget for regeneration.  Regeneration involved partners and was not just about throwing money, it was important to have resources but also the political will of the Council and partners to ensure that regeneration happened.

Mr Northey commented on the further £100m of LAGBI funding and whether there was any further information on what Kent’s share was, and what the Council could do with the money.

Ms McMullan confirmed that figures had been received from the Government and that Kent County Council would have around an additional £750k.  Discussions were underway to determine how that money would be targeted in relation to the regeneration strategy.  This was a one off sum of money budgeted for in the current year, there had been an expectation that it wouldn’t be received and it would increase the current years’ underspend.

The Chairman asked about the £95k spent on ‘international development’ in the Children, Families and Education (CFE) department.  Mr Chard confirmed that it was shown in CFE Policy and Performance.  The Chairman commented that under Corporate Support and External Affairs there was an International Affairs  ...  view the full minutes text for item 132.